The Mining Licencing Regime in Malawi

Malawi is a landlocked southeastern African country bordering Tanzania, Mozambique, and Zambia. It is endowed with varied minerals such as gemstones, coal, uranium and others.[1] Despite its mineral wealth, however, Malawi has a relatively low dependency rate on the exploitation of mineral resources for economic advancement. Currently, mineral resource exploitation contributes only 1 per cent the country’s Growth Domestic Product (GDP).[2] It is for this dark cloud that the Malawian government has committed to creating a conducive environment for large-scale investments in the developing mining sector.[3] It is for this reason that mineral rights have been awarded to a few investors such as Paladin Africa Ltd for the Kayelekera uranium mine in the northern part of Malawi.[4]

This commentary shall discuss the procedure and requirements for applications for mineral rights under the principal legislation, namely; the Mines and Minerals Act No. 31 od 1981 (MMA) read with its accompanying regulations.

1          Who owns minerals and grants mineral rights in Malawi?

In the first place, all mineral resources in Malawi are vested in the President as the custodian on behalf of the people of Malawi.[5] The implication here is that no person can carry out any mining activity without first having been conferred mineral rights in respect of a particular mineral on land.[6] The Ministry of Natural Resources, Energy, and Environment (the Ministry) is the government authority responsible for minerals generally, while the Minister is empowered to award mineral rights (licensing). Under the MMA, the Minister may also appoint a Commissioner for Mines and Minerals (Commissioner) whose work is to administer the MMA.[7]

2          What types of mining licenses are provided under the Malawian mining regime?

The mineral rights to search for and extract minerals from the earth are acquired through the grant of licenses such as the reconnaissance, exclusive prospecting and mining licenses.[8] An applicant for mineral rights should be a Malawian citizen or a resident in Malawi for four consecutive years before making the application.[9] Applications for reconnaissance licenses, exclusive prospecting licenses and mining licenses shall be made by and granted to companies registered in Malawi under the Companies Act of 2013.[10]

First, the reconnaissance license gives the holder a right to carry out a physical search for specific minerals[11] on a specified license area.[12] When making an application for a reconnaissance license, an applicant must furnish their details; their plan of the license area; an indication of the minerals sought; a statement on the applicant’s financial; and technical resources or capability accompanied by a proposed work Programme.[13] Once the applicant fulfills these requirements, a reconnaissance license is granted for 12 months period with an option to renew the license for a further 12 months.[14]

Secondly, the exclusive prospecting license gives the holder exclusive rights to locate minerals within a license area and ascertain the availability, quality, quantity, and the economic value of the minerals sought.[15] An application for an exclusive prospecting license must have the applicant’s financial and technical resources statement; a work programme and an employment and training of citizens plan.[16] Furthermore, an exclusive prospecting license is granted for a maximum period of three years with an option to renew twice for periods not exceeding two years each.[17] Applications for renewal are required to be submitted at least three months before the expiration of the license and must have a report on activities and a proposed work programme.[18]

Thirdly, a mining license gives a holder exclusive rights to extract minerals within a license area and sell them locally or internationally.[19] A mining license shall be granted to an existing exclusive prospecting license holder on an area covered by such a prospecting license.[20] If a holder of an exclusive prospecting license discovers minerals in commercial quantities, he must notify the Minister forthwith and apply for a mining license within two months of the said notice.[21] This application must be accompanied by particulars of the minerals found; a work programme; environmental report; the amount of capital to be invested, operating costs of the mining activities, revenues and financing projections; and local content requirements reports. The local content requirement report must indicate the procurement of local goods and services and the employment and training of citizens (skills transfer).[22] For a mining license to be granted, an environmental impact assessment (EIA) must be carried out according to the Environmental Management Act No. 19 of 2017. Due to the nature of mining activities, mining licenses are granted for a period not exceeding 25 years[23] with an option to renew for a period not exceeding 15 years[24] Applications for renewal must be made a year before the mining license expires and must be accompanied with a work programme as well as a financial statement.[25]

3          What are the environmental requirements for mining?

All applications for reconnaissance licenses, exclusive prospecting licenses, and mining licenses must be accompanied by an Environmental Impact Assessment [EIA] report for the license area.[26] The EIA report must inform the effects mining activities would have on the environment and proposed methods of alleviating such impacts on the environment.[27] The EIA report is one of the key considerations for the Minister when exercising his discretion whether to grant or reject an application for a mining license.[28] The EIA report must be prepared and submitted by an approved Consultant under the EIA Guidelines and must exhibit proof of public consultations with all stakeholders who may be affected by the mining.[29] A mining license holder cannot embark on mining activities unless these environmental requirements are satisfied.[30]

4          Concluding remarks

In conclusion, the MMA is archaic and requires improvements to make it more predictable for instance by limiting the Ministerial discretion on licensing to safeguard the interests of investors. A Mines and Minerals Bill of 2015 is currently in circulation for public commenting and it seeks to address the shortcomings of the MMA.[31]

Written by Ahmed Mussa (LLM candidate in the specialised LLM in the Law of Mineral and Petroleum Extraction and Use).